- Chicago saw a bounce this morning following macro market activity, which included a broad rally of US and European stock markets. Commodities tried to follow although volumes have not been huge!. There has been a US$ rally which weakened grains and the soybean complex has found some short covering support. As the DOW rallied 300-400 points today’s grain market reaction does not inspire confidence for a long lasting bullish run.
- China imported record tonnages of grain during July with combined wheat, corn, barley, DDG’s and rice imports at over 4 million mt. The rising imports are about to collide with another sizeable Chinese grain harvest that will start in September. Amid China’s growing stocks of grain (highest level since China entered the WTO in 2001), the Government continues to look for ways to slow imports through regulation. US DDG and sorghum basis have declined in recent days amid concern about a slower Chinese grain import profile this autumn.
- CBOT grain futures will likely continue to follow macro market developments and how the Chinese equity market reacts to their monetary easing stance overnight. Any actual or perceived weakness in the Chinese equity markets will not bode well for commodity valuations. All eyes will remain on China amid the fear that their economic slowdown is worse than being reported by Beijing.